Are Customers Really Letting go of Physical Banking?

The number of physical banking venues dedicated solely to financial services is decreasing rapidly, leading many commentators to speculate whether we’re witnessing the death of banking premises altogether.

This trend would indicate that customers have now fully transitioned to digital banking and are no longer interested in accessing banking services from specific locations. However, research suggests that a physical presence is still a major draw for customers.

Here, we’ll explore what’s happening to physical banking venues and how service provision is diversifying to marry commercial needs with consumer preferences.

What is happening to physical banking venues?

Use of physical banking venues is undoubtedly declining. At RBS, over-the-counter transactions have dropped by 43% since 2010, while online banking has grown four-fold.

Some banks are taking more of a lead on reducing their portfolio than others. Here’s an overview of the proportion of branches the UK’s major banks have closed since 2011 (Verdict):

Royal Bank of Scotland (in Scotland) = 43%

HSBC = 42%

Natwest = 31%

Barclays = 24%

Santander = 21%

Lloyds Banking Group = 12%

This rate of decline fails to tell the whole story, however. Many banks are re-organising their portfolios to create multi-service hubs in central locations, or partnering with other companies to provide physical banking services in new venues.

How are banking services diversifying to include new venues?

Rather than physical banking services becoming increasingly difficult to reach, new arrangements with other companies are making banking services more accessible than ever.

Here are some examples of the diversification of physical banking premises: